THE LIMITED PARTNER INTERESTS IN THE PARTNERSHIP REPRESENTED BY
THIS LIMITED PARTNERSHIP AGREEMENT HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. WITHOUT SUCH
REGISTRATION, SUCH INTERESTS MAY NOT BE SOLD, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON
DELIVERY TO THE GENERAL PARTNER OF AN OPINION OF COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO
THE GENERAL PARTNER OF SUCH OTHER EVIDENCE THAT MAY BE
SATISFACTORY TO THE GENERAL PARTNER TO THE EFFECT THAT ANY SUCH
TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.
---------------------
AGREEMENT OF
LIMITED PARTNERSHIP OF
COMPACT DISC INVESTMENTS XV, LTD.
This Agreement of Limited Partnership (this "Agreement") is entered into
to be effective as of April 30, 1996, by and among BDMAC, L.C., a Texas
limited liability company, as General Partner (herein so called), and each of
the other parties whose Subscription Agreements with respect to Units are
accepted by the General Partner (such other parties collectively referred to
herein as to "Limited Partners").
I. FORMATION
The parties hereby form a limited partnership (the "Partnership") pursuant
to the provisions of the Texas Revised Limited Partnership Act, for the
purposes and upon the terms and conditions set forth in this Agreement.
II. CERTIFICATE OF LIMITED PARTNERSHIP
A Certificate of Limited Partnership of the Partnership shall be filed or
recorded in such public offices as is required under applicable law or deemed
advisable in the discretion of the General Partner. Amendments to this
certificate also shall be file or recorded in such public offices as is
required under applicable law or deemed advisable in the discretion of the
General Partner.
III. NAME AND PRINCIPAL PLACE OF BUSINESS
The name of the Partnership is "Compact Disc Investments XV, Ltd.," and
its principal place of business shall be 0000 Xxxxx Xxxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000. Additional or
other places of business may be established at such locations and in such
jurisdictions as the General Partner may from time to time determine. The
General Partner shall promptly notify the Partners of any change in the
Partnership's principal place of business.
IV. TERM OF PARTNERSHIP
The Partnership shall continue for a period ending the earlier of (i)
December 31, 2046, which date may be extended to a later date by the General
Partner in its discretion, (ii) the date of occurrence of any of the events
specified in Section 19.1 hereof as causing the Partnership to be dissolved,
or (iii) the date on which the Partnership is dissolved by operation of law
or judicial decree.
V. DEFINITIONS
5.1 AFFILIATE means (a) any other person directly or indirectly
controlling, controlled by or under common control with such person, (b) any
other person owning or controlling ten percent or more of the outstanding
voting securities of such person, (c) any officer, director or partner of
such person, and (d) if such person is an officer, director or partner, any
company for which such person acts in any such capacity.
5.2 CAPITAL ACCOUNT. With respect to each Partner, the account computed
and maintained for such Partner pursuant to Section 8.3.
5.3 CAPITAL ACCOUNT DEDUCTION. For any taxable year of the
Partnership, each item of deduction or loss of the Partnership for such
taxable year, determined in the same manner as such item of deduction or loss
is determined for federal income tax purposes.
5.4 CAPITAL ACCOUNT GROSS INCOME. For any taxable year of the
Partnership, each item of gross income of the Partnership for such taxable
year, determined in the same manner as such item of gross income is
determined for federal income tax purposes, except any income received by the
Partnership that is exempt from federal income tax shall be included.
5.5 CAPITAL CONTRIBUTION means the amount of money contributed to the
capital of the Partnership by a Partner.
5.6 CODE means the Internal Revenue Code of 1986, as may be amended
from time to time. All references herein to sections of the Code shall
include any corresponding provision or provisions of succeeding law.
5.7 CONSENT OF THE LIMITED PARTNERS means the written consent of Limited
Partners whose Units constitute a majority of the aggregate Units held by all
Limited Partners.
5.8 DISTRIBUTION VALUE. With respect to any property distributed to a
Partner by the Partnership, the fair market value (determined without regard
to Section 7701(g) of the Code) of such property at the time of distribution
(net of liabilities secured by such distributed property
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 3
that such Partner assumes or takes subject to in connection with such
distribution), as determined by the General Partner using such reasonable
method of valuation as he deems appropriate.
5.9 EVENT OF WITHDRAWAL. Any of the following occurrences with respect
to the General Partner: (1) the General Partner makes an assignment for the
benefit of creditors, (2) the General Partner files a voluntary petition in
bankruptcy, (3) the General Partner becomes the subject of an order for
relief or is declared insolvent in any federal or state bankruptcy or
insolvency proceeding, (4) the General Partner files a petition or answer
seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any law, (5)
the General Partner files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it pursuant to
parts (1) through (4) above, (6) the General Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of the
General Partner or of all or any substantial part of its properties, (7) the
lapse of 120 days after the commencement of any proceeding against the
General Partner seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any law if
such proceeding has not been previously dismissed, (8) the lapse of 90 days
after the appointment, without the consent or acquiescence of the General
Partner, of a trustee, receiver or liquidator of the General Partner or all
or any substantial part of the properties of the General Partner if such
appointment has not previously been vacated or stayed, (9) the lapse of 90
days after the date of expiration of a stay, if the appointment has not
previously been vacated, (10) the dissolution of the General Partner, or the
filing by the General Partner of articles of dissolution with the Secretary
of State, (11) the withdrawal of the General Partner in accordance with
Section 18.2, or (12) the termination of the General Partner's status as a
General Partner pursuant to Section 15.1.
5.10 GENERAL PARTNER means BDMAC, L.C., a Texas limited partnership, or
any other person or entity who succeeds it in that capacity.
5.11 LIMITED PARTNER means the persons described at Section 7.2 of this
Agreement, any person or entity who is admitted to the Partnership as a
Limited Partner following the formation of the Partnership in accordance with
the provisions of this Agreement, or an assignee of any such person or entity
who has been admitted to the Partnership as a Limited Partner.
5.12 MEMORANDUM. The Personal and Confidential Private Placement
Memorandum dated April 30, 1996, which offers Units in the Partnership.
5.13 ORGANIZATION AND OFFERING EXPENSES. All costs of organizing the
Partnership and offering and selling the Units, including, but not limited
to, expenses for travel, printing, engraving, mailing, expenses of
qualification of the sale of such Units under federal and state law,
including taxes and fees, and accountants' and attorneys' fees, and other
front-end fees, but excluding dealer allowances or commissions, if any.
5.14 PARTNERS mean collectively the General Partner and the Limited
Partners, and reference to a "Partner" shall be to any one of the Partners.
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 4
5.15 PAYOUT means that point in time at which the aggregate amount of
cash theretofore distributed to a Limited Partner is equal to such Limited
Partner's Capital Contribution plus the twelve percent preferred return.
Payout will be determined separately for each Limited Partner.
5.16 REGULATIONS means the regulations promulgated by the United States
Department of the Treasury pursuant to and in respect of provisions of the
Code. All references herein to sections of the Regulations shall include any
corresponding provision or provisions of succeeding, similar, substitute,
proposed or final Regulations.
5.17 SUBSCRIPTION means the Capital Contribution made by a Limited
Partner.
5.18 SUBSCRIPTION AGREEMENT means a Subscription Agreement for the
Partnership, in the form set forth as Attachment I to this Agreement,
pursuant to which a Limited Partner subscribes to purchase Units.
5.19 UNIT means a Limited Partner interest representing a Capital
Contribution of $10,000 made pursuant to a Limited Partner's Subscription
Agreement.
5.20 PREFERRED RETURN means a twelve percent preferred return will be
paid to all limited partners prior to any distributions which are shared
between the limited and general partner. The preferred return is paid on the
current balance of the limited partner's capital contribution less any
capital returned over and above the preferred return.
VI. PURPOSE OF PARTNERSHIP
6.1 PURPOSE AND BUSINESS. The purpose and business for which the
Partnership is formed shall be to engage in any lawful business for which
limited partnerships may be formed under the Texas Revised Limited
Partnership Act, including, without limitation, to engage in any or all of
the following acts:
(a) Xxx, be sued, complain and defend in all courts;
(b) Transact its business, carry on its operations and have and exercise
the powers granted by this section in any state, territory, district or
possession of the United States, and in any foreign country;
(c) Make contracts and guarantees, incur liabilities, and borrow money;
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 5
(d) Sell, convey, lease, exchange, transfer, mortgage, pledge, and
otherwise dispose of all or any part of its property and assets;
(e) Acquire by purchase or in any other manner, take, receive, own, hold,
improve, and otherwise deal with any interest in real or personal
property, wherever located;
(f) Issue notes, bonds and other obligations and secure any of them by
mortgage, deed of trust, pledge or security interest of or in any or
all of its assets;
(g) Purchase, take, receive, subscribe for or otherwise acquire, own,
hold, vote, use, employ, sell, mortgage, loan, pledge or otherwise
dispose of and otherwise use and deal in and with stock or other
interests in and obligations of domestic and foreign corporations,
associations, general or limited partnerships, limited liability
companies, business trusts, and individuals;
(h) Invest its surplus funds, lend money from time to time in any manner
which may be appropriate to enable it to carry on the operations or
fulfill the purposes set forth in this Agreement, and take and hold
real property and personal property as security for the payment of
funds so loaned or invested;
(i) Elect or appoint agents and define their duties and fix their
compensation;
(j) Be a promoter, stockholder, partner, member, associate, or agent of
any corporation, partnership, limited liability company, joint venture,
trust or other enterprise;
(k) Make and alter operating agreements, not inconsistent with this
Agreement or with the laws of this state, for the administration and
regulation of the affairs of the Partnership;
(l) Cease its activities and dissolve;
(m) Do every other act not inconsistent with law which is appropriate to
promote and attain the purposes set forth in this Agreement; and
(n) Transact any or all other lawful business for which limited
partnerships may be formed under Texas law.
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 6
VII. PARTNERS
7.1 GENERAL PARTNER. The General Partner and its address are as follows:
BDMAC L.C.
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
7.2 LIMITED PARTNERS
(a) LIMITED PARTNERS. The Limited Partners shall be those persons
whose Subscription Agreements with respect to Units are accepted by the
General Partner. The addresses of the Limited Partners are set forth in their
respective Subscription Agreements.
(b) ADMISSION OF ADDITIONAL LIMITED PARTNERS. Following the formation
of the Partnership, additional Limited Partners may be admitted only with the
written consent of the General Partner and the Consent of the Limited
Partners, except as provided by Section 15.5 hereof.
VIII. CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
8.1 CAPITAL CONTRIBUTIONS
(a) CAPITAL CONTRIBUTIONS OF THE GENERAL PARTNER.
(i) As each Limited Partner Subscription is received and
accepted by the General Partner, the General Partner will make a
Capital Contribution in an amount equal to one percent (1%) of
such subscription (including for such purpose the amount of the
Capital Contribution of the General Partner).
(ii) The General Partner may make additional Capital
Contributions, but shall not be required to make any additional
Capital Contributions, except as may be required herein or by
applicable law.
(b) CAPITAL CONTRIBUTIONS OF THE LIMITED PARTNERS.
(i) Each Limited Partner shall make a Capital Contribution of
the amount set forth in his Subscription Agreement, which shall be
$10,000 per Unit subscribed. Units shall be issued to Limited Partners
whose executed Subscription Agreements are accepted by the General
Partner.
(ii) Except as may be required by applicable law, the Limited
Partners shall not have any obligation to make further contributions to
the capital of the Partnership.
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 7
8.2 WITHDRAWAL OF CAPITAL. No Partner shall have any right to withdraw or
make a demand for withdrawal of any Partner's Capital contribution but shall
only be entitled to distributions as provided herein.
8.3 CAPITAL ACCOUNTS. The Partnership shall maintain for each Partner a
Capital Account in accordance with the following rules:
(a) BALANCE. The balance of a Partner's Capital Account shall be
increased and decreased as follows:
(i) The balance of a Partner's Capital Account shall be
increased by (a) the amount of such Partner's Capital Contribution to
the Partnership and (b) the amount of Capital Account Gross Income
that is allocated to such Partner pursuant to this Agreement.
(ii) The balance of a Partner's Capital Account shall be
decreased by (a) the amount of money and the Distribution Value of
any property that the Partnership distributes to such Partner and
(b) the amount of Capital Account Deductions and expenditures of the
Partnership described in Section 705(a)(2)(B) of the Code that is
allocated to such Partner pursuant to this Agreement.
(b) ADJUSTMENTS FOR UNREALIZED GAIN AND UNREALIZED LOSS. For purposes
of computing and maintaining Capital Accounts pursuant to Section 8.3(a),
immediately prior to the distribution of any property of the
Partnership to a Partner (including a distribution in liquidation
of the Partnership), the amount of unrealized income or gain with
respect to such property shall be deemed to be an item of Capital
Account Gross Income recognized by the Partnership and shall be
allocated to the Partners as provided in Section 10.3, and the
amount of unrealized loss or deduction with respect to such
property shall be deemed to be an item of Capital Account Deduction
recognized by the Partnership and shall be allocated to the
Partners as provided in Section 10.3. For purposes of this
Subsection (b), the unrealized income or gain with respect to a
property of the Partnership shall be equal to the excess of the
fair market value of such property (taking Section 7701(g) of the
Code into account) on the date of distribution over the adjusted
tax basis of such property and the unrealized loss or deduction
with respect to a property of the Partnership shall be equal to the
adjusted tax basis of such property over the fair market value of
such property (taking Section 7701(g) of the Code into account) on
the date of distribution. For purposes of this Subsection (b), the
fair market value of distributed property shall be determined by
the General Partner using such reasonable method of valuation as it
deems appropriate.
(c) CAPITAL ACCOUNTS OF TRANSFEREES. A transferee of an
interest in the Partnership shall succeed to the Capital Account
attributable to such interest, and there shall be no adjustment to
the Capital Accounts as a result of such transfer; provided,
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 8
however, that in the event the Partnership makes an election under
Section 754 of the Code, appropriate adjustments pursuant to such
Section shall be made to the Capital Account of each Partner
affected by such election; provided further, that if the transfer
causes a termination of the Partnership pursuant to Section
708(b)(1)(B) of the Code, the assets of the Partnership shall be
deemed to have been distributed to the Partners (including such
transferee) in liquidation of the Partnership pursuant to Article XX
and recontributed by such Partners in reconstitution of the
Partnership. The Capital Accounts of the Partnership following such
deemed reconstitution shall be maintained in accordance with the
principles of this Section 8.3.
(d) COMPLIANCE WITH REGULATIONS. The Partners intend that
the terms of this Agreement with respect to the computation and
maintenance of Capital Accounts comply in all respects with the
provisions of Regulation Section 1.704l(b)(2)(iv). Notwithstanding
any other provisions of this Agreement, (1) the Partnership shall
make all adjustments to the Capital Accounts required by Regulation
Section 1.704l(b)(2)(iv), and (2) if at any time during the term of
the Partnership it shall be determined by the General Partner that
the Capital Accounts have not been computed and maintained in
accordance with Regulation Section 1.704-l(b)(2)(iv), the Capital
Accounts shall be retroactively adjusted so that they are computed
and maintained in accordance with Regulation Section
1.704-l(b)(2)(iv).
8.4 NO INTEREST ON CAPITAL CONTRIBUTIONS. No interest shall be paid on
any Capital Contribution.
IX. BOOKS, FISCAL YEAR, REPORTS AND TAX MATTERS
9.1 BOOKS. The General Partner shall maintain full and complete books
and records for the Partnership at its principal office. Each Limited Partner
and his representative shall have the right to inspect the books and records
of the Partnership at any time during normal business hours upon written
request to the General Partner, at which time such books and records shall be
available for copying upon payment of reasonable charges therefor by the
Limited Partner or his representative.
9.2 FISCAL YEAR. The Partnership shall adopt a fiscal year beginning on
the first day of January and ending on the last day of December of each year.
9.3 REPORTS. The Partnership shall provide a quarterly financial summary
to the Limited Partners entitled "Financial Status Report and Distributions."
Such report shall not be prepared in accordance with generally accepted
accounting principles. The quarterly report shall be provided to the Limited
Partners no later than 15 days after the end of the month to which such
report relates, provided that the reports for the first three months of the
Partnership's operations may be provided within 15 days after the end of the
fourth month of such operations. The General Partner shall also furnish a
report to each Limited Partner containing such information as is pertinent
for the preparation of such Limited Partner's federal income tax return no
later than 90 days after the end of each tax year.
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 9
9.4 TAXATION AS A PARTNERSHIP. The General Partner, while serving as
such, agrees to use its best efforts to cause there to be compliance at all
times with applicable law to ensure that the Partnership will be classified
as a partnership for federal income tax purposes.
9.5 TAX MATTERS PARTNER. It is hereby agreed by all Partners that the
General Partner shall be the "tax matters partner" for the Partnership, as
that term is defined in Section 6231(a)(7) of the Code. As the tax matters
partner, the General Partner shall be empowered to represent the Partnership
and the Partners, at Partnership expense, in any administrative or judicial
proceeding involving the federal income tax liability of the Partners
resulting from Partnership activities.
X. CASH DISTRIBUTIONS AND ALLOCATIONS OF INCOME AND LOSS
10.1 DETERMINATION OF PROFIT AND LOSS. At the end of each fiscal year of
the Partnership, all Partnership costs, realized losses, realized gains, and
revenues shall be determined in accordance with generally accepted accounting
principles and shall be charged or credited, as the case may be, to the
Partners in accordance with the provisions of this Article X.
10.2 CHARGING OF COSTS AND CREDITING OF REVENUES.
(a) All dealer allowances and commissions and Organization and
Offering Expenses incurred by the Partnership during any period in
connection with the offer and sale of Units, shall be charged 99% to
the Limited Partners and one percent (1%) to the General Partner. All
other costs incurred by the Partnership during any period shall be
allocated to the Partners in the same proportion as revenues are
allocated to such Partners for such period.
(b) All revenues of the Partnership for any period shall be credited
as follows:
(i) 100% shall be credited to the limited partners until they have
received their twelve percent preferred rate of return.
(ii) 85% shall be credited to the Limited Partners, until Payout
has been achieved, in the percentage (the "Pre-Payout Ratio") for each
Limited Partner that bears the same ratio to 85% as the number of Units owned
by such Limited Partner bears to the aggregate number of Units outstanding,
and the remaining 15% shall be credited to the General Partner. Payout
shall be determined separately for each Limited Partner.
(iii) As Payout is achieved for each Limited Partner, paragraph
(ii) above shall no longer apply to such Limited Partner, and the revenue
that would otherwise be credited to such Limited Partner pursuant to be
Pre-Payout Ratio pursuant to paragraph (ii) above shall be reduced to a
percentage (the "Post-Payout Ratio") equal to such Limited Partner's
Pre-Payout Ratio multiplied by 50.505%. The excess of such Limited Partner's
Pre-Payout Ratio over his Post-
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 10
Payout Ratio shall be allocated to the General Partner. The intent of
this paragraph (ii) is to establish allocation ratios, once Payout has
been achieved for all Limited Partners, of 50% for the Limited Partner
in the aggregate and 50% for the General Partner.
(iv) After Payout has been achieved for all Limited Partners,
revenue shall be credited 50% to the Limited Partners (pro rata in
accordance with the ratio of the Post-Payout Ratios to one another) and
50% to the General Partner.
10.3 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES. For purposes of computing
and maintaining Capital Accounts pursuant to Section 8.3(a), each item of
Capital Account Deduction shall be allocated to the Partners in the same
proportions as the cost giving rise to such Capital Account Deduction was
charged to the Partners pursuant to Section 10.2 and each item of Capital
Account Gross Income shall be allocated to the Partners in the same
proportions as the revenue giving rise to such Capital Account Gross Income
was credited to the Partners pursuant to Section 10.2.
10.4 ALLOCATIONS FOR FEDERAL INCOME TAX PURPOSES
(a) For federal income tax purposes, (i) each item of Partnership income
and gain shall be allocated to the Partners in the same proportions as the
corresponding item of Capital Account Gross Income was allocated to the
Partners pursuant to Section 10.3 and (ii) each item of Partnership loss and
deduction shall be allocated to the Partners in the same proportions as the
corresponding item of Capital Account Deduction was allocated to the Partners
pursuant to Section 10.3.
(b) Notwithstanding any other provision of this Section, if any property
is contributed to the Partnership as a Capital Contribution, the General
Partner shall make such allocations of Partnership income, gains, losses and
deductions and such adjustments to the Capital Accounts of the Partners that
shall be necessary or appropriate to comply, to the extent possible, with the
provisions of Section 704(c) of the Code with respect to such contributed
property.
10.5 SPECIAL PROVISIONS REGARDING CERTAIN ALLOCATIONS TO LIMITED PARTNERS.
Notwithstanding any other provisions of this Article X, if, and to the extent
that, an allocation of Capital Account Deduction to a Limited Partner
pursuant to Section 10.3 would cause such Partner's Capital Account to be
negative as of the end of the Partnership's taxable year to which such
allocation relates, (a) such Capital Account Deduction (and the corresponding
item of deduction or loss for federal income tax purposes) shall instead be
allocated to the General Partner and (b) the cost giving rise to such Capital
Account Deduction shall be charged to the General Partner rather than to such
Limited Partner.
10.6 QUALIFIED INCOME OFFSET. Notwithstanding any other provision of this
Agreement to the contrary, for each taxable year of the Partnership, each
Partner's Capital Account shall be reduced for all adjustments, allocations
and distributions described in Section 1.704-
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 11
l(b)(2)(ii)(d)(4),(5) and (6) of the Regulations. If, with respect to any
taxable year of the Partnership, a Partner receives an adjustment, allocation
or distribution described in Section 1.704-l(b)(2)(ii)(d)(4), (5) or (6) of
the Regulations that results in such Partner's Capital Account having a
negative balance, Capital Account Gross Income (and the corresponding items
of income for federal income tax purposes) for such taxable year and all
subsequent taxable years shall be allocated to such Partner in an amount and
manner sufficient to eliminate such negative balance in such Partner's
Capital Account as quickly as possible. The provisions of this Section 10.6
are intended to constitute a "qualified income offset" within the meaning of
Section 1.704-l(b)(2)(ii)(d)(3) of the Regulations.
10.7 ALLOCATIONS ATTRIBUTABLE TO TRANSFERRED INTERESTS. If an interest in
the Partnership is considered to have been transferred during any taxable
year of the Partnership, unless otherwise required by law, all amounts
attributable to such interest for such taxable year shall be divided and
allocated proportionately to the transferor and the transferee based upon the
number of days during such taxable year for which each party was the owner of
such interest. Notwithstanding any provisions above to the contrary, all
items (for purposes of computing and maintaining Capital Accounts pursuant to
Section 8.3(a) and for federal income tax purposes) resulting from a
disposition of all or substantially all of the assets of the Partnership
shall be allocated solely to the persons owning interests in the Partnership
as of the date such disposition occurs.
10.8 DISTRIBUTIONS.
(a) The General Partner will make distributions of the Partnership's
available cash, after adequate reserves determined in the sole discretion of
the General Partner, to the Partners on a monthly basis by the 15th day of
the following month. Cash distributions to the Partners will be made in the
same proportions that the revenue giving rise to the distributed funds were
credited to such Partners pursuant to Section 10.2 above.
(b) The provisions of this Section 10.8 shall not apply to distributions
in liquidation of the Partnership, which are governed by the provisions of
Section 20.1.
10.9 POSSIBLE ADDITIONS AND REVISIONS. The provisions of this Article have
been prepared in such a manner that certain circumstances deemed unlikely to
arise (e.g., the contribution of appreciated or depreciated property to the
Partnership, the incurrence of non recourse indebtedness by the Partnership
or the subsequent contribution of money or property to the Partnership by a
new Partner in consideration for an interest in the Partnership) have not
been dealt with in terms of Capital Account adjustment and allocations
provisions. Should such unlikely circumstances nevertheless exist, the
General Partner is hereby authorized to amend or supplement this Agreement,
in a manner that is consistent with the existing provisions of this Agreement
to the extent reasonable possible) and the Code and the Regulations, to deal
with such circumstances.
XI. MANAGEMENT OF PARTNERSHIP BY GENERAL PARTNER
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 12
11.1 MANAGEMENT. The General Partner shall manage the business of the
Partnership. The General Partner shall devote to the Partnership so much of
its time as is necessary or required for the effective conduct and operation
of the Partnership's business.
11.2 POWERS OF THE GENERAL PARTNER. The General Partner shall have
full charge of overall management, conduct, and operation of
the Partnership in all respects and in all matters, and shall
have the authority to act on behalf of the Partnership in all
matters respecting the Partnership, its business, and its
property, subject to any limitations provided by law or in
this Agreement. Notwithstanding the foregoing, the General
Partner may not take any of the following actions on behalf of
the Partnership without the prior Consent of Limited Partners:
(a) Commingle the funds of the Partnership with the funds of any
other person or entity.
(b) Take any action in contravention of this Agreement.
(c) Amend this Agreement.
11.3 RIGHT TO RELY UPON THE AUTHORITY OF GENERAL PARTNER. Persons dealing
with the Partnership may rely upon the representation of the General Partner
that it has the authority to make any commitment or undertaking on behalf of
the Partnership. No purchaser of any property or interest therein owned by
the Partnership shall be required to determine the sole and exclusive
authority of the General Partner to sign and deliver on behalf of the
Partnership any instrument of transfer with respect thereto or to see to the
application or distribution of revenues or proceeds paid or credited in
connection therewith unless such purchaser shall have received written notice
from the Partnership affecting the same.
11.4 COMPENSATION OF THE GENERAL PARTNER. For managing the Partnership on
a day-to-day basis, the General Partner will receive a management equal to
$500.00 per month per operating store.
11.5 EXCULPATION AND INDEMNIFICATION OF THE GENERAL PARTNER. Neither the
General Partner nor any Affiliate thereof shall have any liability to the
Partnership or to any Limited Partner for any loss incurred by the
Partnership or such Limited Partner which arises out of any action or
inaction of either or both of the General Partner or Affiliate thereof if the
General Partner involved or Affiliate thereof in good faith determined that
such course of conduct was in the best interest of the Partnership and such
course of conduct did not constitute gross negligence or gross misconduct of
the General Partner involved or Affiliate thereof. The General Partner and
each Affiliate thereof shall be indemnified by the Partnership against
losses, judgments, liabilities, expense and amounts paid in settlement of any
claims sustained in connection with the Partnership, provided the losses were
not the result of gross negligence of gross misconduct on the part of the
General Partner involved or an Affiliate thereof.
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 13
XII. INDEPENDENT ACTIVITIES OF PARTNERS
Any of the Partners may engage in or possess an interest in other business
ventures of every nature and description, independently or with others,
including but not limited to, the ownership, financing, leasing, management,
syndication or investments in real or personal property of any kind
whatsoever, and neither the Partnership nor any of the Partners shall have
any right by virtue of this Agreement in and to such independent ventures or
to the income or profits derived therefrom.
XIII. POWER OF ATTORNEY
Each Limited Partner does irrevocably constitute and appoint the General
Partner as such Limited Partner's true and lawful attorney-in-fact, with full
power and authority in such Limited Partner's name, place and stead to:
(a) Execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices the following:
(1) This Agreement and the Partnership's Certificate of the
Limited Partnership, for the purpose of forming the Partnership and
admitting to the Partnership as Limited Partners each person to be so
admitted.
(2) One or more amendments to this Agreement or the Certificate
of Limited Partnership as may be adopted from time to time pursuant to
Section 21.3;
(3) All fictitious name certificates and other certificates and
instruments (including counterparts of this Agreement) which the General
Partner deems appropriate to qualify or continue the Partnership as a
limited partnership or to form additional partnerships wherein the
Limited Partners will have limited liability in the jurisdictions in
which the Partnership or such additional partnerships may conduct
business; and
(4) All filings with agencies of the federal government or any
other jurisdiction which the General Partner deems appropriate to carry
out the business of the Partnership.
(b) Compromise, on behalf of such Limited Partner, any obligation of
a Limited Partner to return money or property paid or distributed to such
Limited Partner in violation of law.
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 14
The power of attorney granted herein is hereby declared irrevocable and a
power coupled with an interest, shall survive the death or disability of a
Limited Partner and shall extend to such Limited Partner's heirs, successors
and assigns.
XIV. POWERS OF THE LIMITED PARTNERS: LIMITED LIABILITY
14.1 POWERS OF THE LIMITED PARTNERS. The Limited Partners as such shall
not take part in the management of the business of, or transact any business
for, the Partnership and shall have no power to sign for or bind the
Partnership, except where a Limited Partner is also a General Partner.
14.2 LIMITED LIABILITY.
(a) Anything to the contrary herein expressed or implied
notwithstanding, no Limited Partner (except where a Limited Partner
is also a General Partner) shall be personally liable for any of
the debts of the Partnership or any of the losses thereof in excess
of his share of Partnership assets, Capital Contributions which he
has made or is obligated to make to the Partnership, and his share
of the Partnership's income and gains.
(b) Except as otherwise provided by the Texas Revised
Limited Partnership Act or herein, the Partnership may not make a
distribution to the Partners to the extent that, immediately after
giving effect to the distribution and despite any compromise of a
claim as provided in Section 14.2(d), all liabilities of the
Partnership, other than liabilities to Partners with respect to
their Partnership interests and liabilities for which the recourse
of creditors is limited to specified property of the Partnership,
exceed the fair value of Partnership assets, except that the fair
value of the property that is subject to a liability for which
recourse of creditors is limited shall be included in the
Partnership assets only to the extent that the fair value of that
property exceeds that liability.
(c) A Limited Partner who receives a distribution that is not
permitted by Section 14.2(b) has no liability to return the
distribution unless the Limited Partner knew that the distribution
violated Section 14.2(b). This Section 14.2(c) does not affect any
obligation of a Limited Partner under applicable law to return the
distribution.
(d) The General Partner will have the power and authority to
compromise, without the consent of any Limited Partner, any
obligation a Limited Partner may have to so repay amounts
previously distributed to him in violation of the Texas Revised
Limited Partnership Act or this Agreement.
14.3 MEETINGS OF, OR ACTIONS BY, THE LIMITED PARTNERS
(a) Meetings of the Limited Partners to vote upon any
matters as to which the Limited Partners are authorized to take
action under this Agreement or the Texas Revised Limited
Partnership Act may be requested at any time by the General Partner
or by the Limited Partners whose Units constitute not less than ten
percent of the aggregate Units
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 15
held by all Limited Partners by delivering written notice, either
in person or by registered mail, of such call to the Limited
Partners entitled to vote at such meeting to the effect that a
meeting will be held at a time and place designated in such notice,
which shall be not less than five days after notice of the meeting
is given in the manner provided in Section 21.1 hereof. Included
with the notice of a meeting shall be a detailed statement of the
action proposed, including a verbatim statement of the wording of
any resolution proposed for adoption by any Limited Partners and of
any proposed amendment to this Agreement. All expenses of the
meeting and notification shall be borne by the Partnership;
provided, however, that all expenses of Limited Partners traveling
to attend such meeting shall be borne by the Limited Partner
incurring such expense.
(b) Except as otherwise provided herein, action by the
Limited Partners requires the Consent of the Limited Partners.
Attendance by a Limited Partner at any meeting and voting in person
shall revoke any written proxy submitted with respect to action
proposed to be taken at such meeting.
(c) A photographic, photostat, facsimile or similar
reproduction of a writing signed by a Partner shall be regarded as
signed by the Partner for purposes of this Agreement.
XV. ASSIGNABILITY OF GENERAL AND LIMITED PARTNER INTERESTS
15.1 GENERAL PARTNER INTERESTS. The General Partner shall have the right
to sell, transfer or assign all or a portion of its interest without the
approval of the Limited Partners. The assignee of the General Partner's
interest may become a General Partner in the place of its assignor with
respect to the assigned interest only with the Consent of the Limited
Partners unless the assignee of the General Partner's interest is an
Affiliate of the General Partner, in which event the Consent of the Limited
Partners shall not be required. In the event of an assignment of the General
Partner's entire interest in the Partnership and the substitution of the
assignee as General Partner, the assignor's status as a General Partner shall
be terminated.
15.2 LIMITED PARTNER INTERESTS. Except as provided in this Article XV, no
Limited Partner shall sell, transfer, encumber or otherwise dispose of, by
operation of law or otherwise, the whole or any part of its interest in the
Partnership or withdraw or retire from the Partnership. No assignment shall
be valid or effective unless in compliance with the conditions contained in
this Agreement, and any unauthorized transfer or assignment shall be void ab
initio.
15.3 RESTRICTIONS ON TRANSFER. The Limited Partner interests have been
acquired for investment and have not been registered under the Securities Act
of 1933, as amended, or applicable state securities laws. Without such
registration, such interests may not be sold, pledged, hypothecated or
otherwise transferred at any time whatsoever, except upon delivery to the
General Partner of an opinion of counsel that such registration is not
required for such transfer or the submission to the General Partner of such
other evidence as shall be satisfactory to the General Partner to the effect
that any such transfer shall not be in violation of the Securities
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 16
Act of 1933, as amended, or applicable state securities laws or any rule or
regulation promulgated thereunder.
15.4 ASSIGNMENT OF LIMITED PARTNER INTEREST WITHOUT SUBSTITUTION. Upon
compliance with Section 15.3 hereof, together with the prior written consent
of the General Partner, a Limited Partner may transfer all or any part of
such Limited Partner's interest by a written instrument of assignment, the
terms of which shall not be in contravention of any of the provisions of this
Agreement, provided that the assignee thereof shall not become a substituted
Limited Partner except in accordance with Section 15.5 hereof. The assigning
Limited Partner shall deliver to the General Partner a written instrument of
assignment in form and substance satisfactory to the General Partner, duly
executed by the assigning Limited Partner or his personal representative or
authorized agent. Said assignment shall be accompanied by such assurance of
genuineness and effectiveness and by such consents or authorizations of any
governmental or other authorities as may be reasonably required by the
General Partner. An assignee shall be entitled to receive distributions from
the Partnership attributable to the Partnership interest acquired by reason
of any such assignment from and after the effective date of the assignment of
such interest to such assignee; provided, however, that the Partnership shall
be entitled to treat the assignor of such Partnership interest as the
absolute owner thereof in all respects, and shall incur no liability for
distributions made in good faith to such assignor until such time as the
written instrument of assignment has been approved by the General Partner and
recorded on its books and the effective date of the assignment has passed.
15.5 SUBSTITUTED LIMITED PARTNER. Except as otherwise provided in this
Agreement, an assignee of the whole or any portion of a Limited Partner's
interest in the Partnership shall not have the right to become a Limited
Partner in place of its assignor unless (i) the General Partner is provided
with all documents and agreements it reasonably requests and (ii) the General
Partner shall give its written consent thereto. An assignee of a Limited
Partner interest will be recognized by the Partnership as a Limited Partner
as of the day following the date of satisfaction of the foregoing conditions.
15.6 DEATH LEGAL INCOMPETENCY, OR DISSOLUTION OF LIMITED PARTNER. The
death, legal incompetency, dissolution, or other disability of a Limited
Partner shall not dissolve or terminate the Partnership.
XVI. LOANS TO THE PARTNERSHIP
The Partnership may from time to time, borrow such amounts from such
persons (including the Partners or their Affiliates) payable on such terms as
the General Partner may determine, and may pledge, mortgage, or otherwise
encumber the assets of the Partnership in connection with any such borrowing.
XVII. REPRESENTATIONS OF THE LIMITED PARTNERS
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 17
A Limited Partner, by executing this Agreement, represents that:
(a) Such Partner, if a natural person, has reached the age of majority.
(b) Such Partner is sufficiently experienced in business matters to
recognize that the Partnership will be newly organized, has no history of
operations or earnings and is a speculative venture.
(c) Such Partner has carefully reviewed this Agreement and
the exhibits hereto and all pertinent literature and in making an
investment in the Partnership, has relied solely on his independent
investigation and upon his own tax and legal counsel. Such Partner
has not construed the provisions of this Agreement or any other
information provided by the Partnership as legal or tax advice.
(d) Such Partner has had an opportunity to ask questions of
and receive satisfactory answers from the Partnership, or any
person or persons acting on its behalf, concerning the terms and
conditions of this investment, and all such questions have been
answered to the full satisfaction such Partner.
(e) Such Partner is purchasing his interest for his own
account for investment and not with the view toward resale or
distribution in a manner which would require registration under the
Securities Act of 1933, as amended, or any applicable state
securities laws, and he does not now have any reason to anticipate
any change in his circumstances or other particular occasion or
event which would cause him to sell the interest.
XVIII. WITHDRAWAL OF GENERAL PARTNER
18.1 EVENT OF WITHDRAWAL. The General Partner shall cease to be a General
Partner of the Partnership upon the occurrence of an Event of Withdrawal with
respect to such General Partner.
18.2 VOLUNTARY WITHDRAWAL. The General Partner shall not voluntarily
withdraw from the Partnership except with the Consent of the Limited
Partners.
18.3 CONVERSION TO LIMITED PARTNER INTEREST UPON OCCURRENCE OF EVENT OF
WITHDRAWAL. Upon the occurrence of an Event of Withdrawal with respect to the
General Partner except as described in Section 5.9(12) relating to assignment
of all the General Partner's interest in the Partnership, the interest of the
General Partner shall be converted, as of the date of the Event of
Withdrawal, to that of a Limited Partner, without any change in allocations
of income and loss allocable to such interest or such General Partner's
Capital Account and right to distributions.
XIX. DISSOLUTION OF THE PARTNERSHIP
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 18
19.1 DISSOLUTION. Except as otherwise provided in this Agreement, no
Partner shall have the right to cause dissolution of the Partnership before
the expiration of the term for which it is formed. The Partnership shall be
dissolved upon the happening of the earlier to occur of the following events,
and no other events shall cause dissolution of the Partnership:
(a) The expiration of the term of the Partnership as specified in
Article IV;
(b) The decision of the General Partner to dissolve the Partnership;
or
(c) The occurrence of an Event of Withdrawal with respect to the
General Partner, unless (i) there remains at least one other General Partner,
in which event the remaining General Partner shall continue the business of
the Partnership, or (ii) if there is no remaining General Partner, then,
within a period of 90 days from the date of occurrence of such Event of
Withdrawal, Limited Partners, with the Consent of the Limited Partners, elect
to continue the business of the Partnership and elect, effective as of the
date of occurrence of such Event of Withdrawal, a successor General Partner.
19.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP FOLLOWING AN EVENT OF
WITHDRAWAL.
(a) Notwithstanding anything contained in Section 19.1, if
upon the occurrence of an event as specified in Section 19.1(c)
there is no remaining General Partner, a meeting of the Limited
Partners shall be held at a place designated by the Limited
Partners, which location will be decided by and among the Limited
Partners within 45 days after the happening of such event to
consider whether (a) to elect a successor General Partner, which
successor General Partner shall then become the General Partner,
and continue the Partnership on the same terms and conditions as
are contained in this Agreement or (b) to wind up the affairs of
the Partnership, liquidate its assets and distribute the proceeds
therefrom in accordance with Article XX.
(b) The continuance of the Partnership pursuant to the terms
of Section l9.1(c) is conditioned upon (i) the amendment of the
Certificate of Limited Partnership to reflect that the General
Partner with respect to which the Event of Withdrawal has occurred
(the "Terminated General Partner") has ceased to be a General
Partner, and (ii) delivery to the Terminated General Partner of an
indemnification agreement by the Partnership, in form and substance
reasonably satisfactory to the Terminated General Partner,
indemnifying and holding the Terminated General Partner harmless
against all future liabilities of the Partnership. The indemnity
described in clause (ii) of the preceding sentence shall require
the Terminated General Partner to give the Partnership prompt
notice of all claims against it pertaining to the Partnership and
an opportunity to defend against all such claims.
XX. DISTRIBUTION ON TERMINATION OF PARTNERSHIP
20.1 LIQUIDATION.
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 19
(a) In the event of the dissolution of the Partnership, the
General Partner shall wind up the affairs of the Partnership and,
after payment of all liabilities of the Partnership (including
liabilities to Partners who are creditors), shall distribute the
remaining assets of the Partnership to the Partners in accordance
with the positive balances in their respective Capital Accounts
(after taking into account all adjustments thereto required by the
provisions of Section 8.3 and Article X as a result of the
operations of the Partnership during its final accounting period,
as a result of the sale or other disposition of assets of the
Partnership in connection with the winding up and liquidation of
the Partnership and as a result of any unrealized gain or
unrealized loss inherent in assets of the Partnership to be
distributed in kind). In the discretion of the General Partner,
assets of the Partnership distributed in liquidation may be
distributed subject to liabilities in lieu of payment of such
liabilities.
(b) Notwithstanding any other provision of this Agreement,
if at the time of the liquidation of the General Partner's interest
in the Partnership (as described in this paragraph) General Partner
has a negative balance in its Capital Account, after taking into
account all adjustments required by the terms of this Agreement
with respect to events occurring prior to or simultaneously with
such liquidation, such General Partner, on or before the later of
the end of the taxable year of the Partnership (determined without
regard to Section 706(c)(2)(A) of the Code) in which such
liquidation occurs or the 90th day after the date of such
liquidation, shall make a Capital Contribution in an amount equal
to the amount of such negative balance. For purposes of this
subsection, a liquidation of the General Partner's interest in the
Partnership shall be deemed to occur upon the earlier of (1) the
date on which the Partnership is terminated pursuant to Section
708(b)(1) of the Code, (2) the date on which the Partnership ceases
to be a going concern or (3) the date on which there is a
liquidation of the Partner's interest in the Partnership within the
meaning of Section 1.761-l(d) of the Regulations.
20.2 NO LIABILITY FOR RETURN OF CAPITAL. The General Partner
shall not be liable for the return of all or any part of the
Capital Contributions of a Limited Partner. Any such return shall
be made solely from Partnership assets.
20.3 NO RIGHT OF PARTITION. The Partners shall have no right to
receive Partnership property in kind, nor shall such Partners have
the right to partition the Partnership property, whether or not
upon dissolution and termination of the Partnership.
XXI. GENERAL PROVISIONS
21.1 NOTICES. Except as otherwise provided herein, any notice, payment,
distribution or other communication which shall be required to be given to a
Limited Partner in connection with the business of the Partnership shall be
duly given if in writing and delivered personally to the person to whom it is
authorized to be given at the time of such delivery or, if sent by mail or
telegraph, to the last address furnished by such Limited Partner in writing
for such purpose as of the time of such mailing; and if to a General Partner
or the Partnership, shall be given when
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 20
actually received at the principal office of the Partnership or at such other
address as such General Partner may hereafter specify.
21.2 SURVIVAL OF RIGHTS. This Agreement shall be binding upon and inure to
the benefit of the Partners and their respective heirs, legal
representatives, successors and permitted assigns.
21.3 AMENDMENT. This Agreement may be amended, modified and changed only
with the consent of the General Partner and the Consent of the Limited
Partners.
21.4 LANGUAGE. Whenever the context requires, references in this Agreement
to the singular number shall include the plural, the plural number shall
include the singular, and words denoting gender headings in this Agreement
are for convenience of reference only and shall not be considered in
construing or interpreting this Agreement.
21.5 AGREEMENT IN COUNTERPARTS. This Agreement, or any amendment thereto,
may be executed in multiple counterparts, each of which shall be deemed an
original Agreement, and all of which shall constitute one agreement
notwithstanding that all of the Partners are not signatories to the original
or the same counterpart. The execution of any or all of such counterparts may
be evidenced by facsimile reproduction of the signature of the party so
executing, with the same force and effect as an original signature.
21.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF TEXAS.
21.7 ADDITIONAL DOCUMENTS. Each Partner, upon the request of the others,
agrees to perform any further acts and execute and deliver any documents
which may be reasonably necessary to carry out the provisions of this
Agreement.
21.8 LIMITATION ON CREDITOR INTERESTS. No creditor who makes a
non-recourse loan to the Partnership shall have or acquire at any time, as a
result of making such loan, any direct or indirect interest in the profits,
capital or property of the Partnership, other than as a secured creditor.
21.9 VALIDITY AND SEVERABILITY. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under the present or future laws
effective during the term of this Agreement, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid, or unenforceable provision,
there shall be added automatically as a part of this Agreement a provision as
similar in terms to such illegal, invalid, or unenforceable provision as may
be possible and still be legal, valid, and enforceable.
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 21
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement of
Limited Partnership as of the date indicated above.
GENERAL PARTNER:
BDMAC, L.C..
By: Xxxxx XxxXxxxxx, General Manager
By:
--------------------------------------
Xxxxx XxxXxxxxx, General Manager
LIMITED PARTNERS:
BDMAC, L.C.
[As attorney-in-fact for each of the parties
who has executed a Subscription Agreement in the
form attached hereto as Attachment I which has
been accepted by the General Partner with respect
to the Partnership.]
By: BDMAC, L.C., General Partner
By:
--------------------------------------
Xxxxx XxxXxxxxx, Manager
AGREEMENT OF LIMITED PARTNERSHIP - PAGE 22
